NUKED: Why radiopharmaceuticals are exploding, with Peter MacCallum Cancer Centre and HB Biotechnology

The radiopharmaceuticals sector is on a knife point. The scope of what nuclear medicine can do is exploding. But the radioisotopes that biotechs need to make those therapies are in very, very short supply. Major clinical trials are hitting pause because of shortages of critical nuclear isotopes, and the world's biggest pharmaceutical companies are buying up biotechs that have locked in both the science and the supply chain. 

There will be some very successful winners, and many, many losers as companies fight for the nuclear resources they so desperately need to make their therapies work.

In this series Nuked, we will walk you through this fascinating marriage between chemistry and physics, why is exciting both investors and clinicians, how biotechs are fighting to lock in supplies of nuclear material, and whether Australia has a shot at becoming a nuclear power.

In our first episode, we speak to Peter MacCallum Cancer Center chief radiopharmaceutical scientist Dr Mohammad Haskali and HB Biotechnology managing director Charlie Williams.

Chapters

• 1:53 Peter MacCallum Cancer Centre chief radiopharmaceutical scientist Dr Mohammad Haskali
• 16:26 HB Biotechnology cofounder and managing director Dr Charlie Williams

Transcript

Rachel Williamson: 0:00

Forget nuclear power. Nuclear medicine, now that's the hotspot smart people have their eye on. I'm Rachel Williamson, and this is Phase III. 

We've been using radiation to fix cancers for almost 100 years. You're probably familiar with radiation therapy. A patient lies inside a particle accelerator, which shoots x-rays at solid tumours. It destroys the tumour and the healthy cells around it. 

But now there are radiopharmaceuticals. These are pills or liquids that are made of a radioactive isotope and a biological tracker, linked by what's called a chelator. They are the ultimate in precision medicine, able to target just the cancer cells that directed to. Some are used for diagnosing tumours by lighting them up in scanners, kind of like a cancer geiger counter. Others are used to seek and destroy. 

They could be the absolute cutting edge of cancer and everyone wants in. But there's a catch. Isn't there always? The marriage between nuclear physics, and chemistry isn't always easy and this is what we're going to explore in this series, Nuked. 

This is a complicated topic. It's an even more complicated business model. We're going to start by walking you through where these drugs come from and how they are used. And what better place to start then with the chief cook at the Peter MacCallum Cancer Center in Melbourne, Australia, otherwise known as chief radiopharmaceutical scientist. Dr. Mohammad Haskali. 

You've been described to me as the Peter Mac cook, which is very Breaking Bad, because you are the person who mixes the isotopes together to make the medicines and the diagnostics and then oversee their administration. So let's walk through a normal day for you.

Dr Mohammad Haskali: 2:16

The whole process starts with the production of a radionuclide. Radionuclides are generally produced in one of three ways, involving either nuclear reactors, or cyclotrons, or generators.

Rachel Williamson: 2:29

So Peter Mac has a cyclotron and some generators?

Dr Mohammad Haskali: 2:32

Correct. Because of the short, uh, half lives of these radionuclides, everything really needs to be prepared in the morning and within few hours, and basically the doses for the patients are actually produced for the patient on the morning. So typically our day, uh, commences very early on, uh, for us, it, uh, it could vary from five to 6am and then we'll be producing our radiopharmaceuticals by about 7:30am in readiness for the, for administration into the first patient.

Rachel Williamson: 3:03

Normal drugs can last for months or years on the shelf. But radiopharmaceuticals have at best days before they decay away to nothing. At worst minutes. It's great for waste - leave any leftovers in a lead bucket and by the next day, it'll be gone. But it does require a brand new way of making and delivering drugs. Take technetium 99, the world's most commonly used isotope for cancer diagnostics. It has to be made, tested, delivered, and used within six hours. Fluorine 18, another common diagnostic isotope, is gone after less than two hours. Mohammad Can you walk me through that process, making whatever you need to in the cyclotron, then get taking it to the lab and all that, sort of thing.

Dr Mohammad Haskali: 3:56

So once the radionuclide is produced, it comes into our production lab, where it gets transferred into what we call hot cells, which are basically big boxes of lead shielding. eEach one of them weigh about 10 tons, but their purpose is to enable the production process remotely so that we could put all our radioactive material in there and then we have automated modules in there a bit like robotic machines that do the manufacturing process.

Rachel Williamson: 4:23

So you effectively use robots to minimise the effect of radiation on the people who work there?

Dr Mohammad Haskali: 4:29

Correct. We apply a lot of controls to ensure the minimal radiation exposure. So part of the profession that we accept, a small amount of exposure. We accept that, and we justify it because it's needed to produce these therapeutic doses for patients, which has a net health outcome. And so once the radioactive material is, it's placed in the hot cell, we close the hot cell doors and then we operate the production process through recipes that are drafted for each unique product on our computers.

Rachel Williamson: 5:03

What does a recipe look like?

Dr Mohammad Haskali: 5:04

It's an Excel spreadsheet basically that sends through commands where different valves are opened in different directions at different times and what this help us do is basically take the radioactive material and the pharmaceutical compound and chemically bond them together. So that process is referred to as the labeling. Once the labeling process is completed, we then need to undergo purification to remove all the byproducts and impurities.

Rachel Williamson: 5:31

What impurities, you might ask? Impurities can be biological, if the targeting protein or antibody is contaminated during production. 

But impurities can also be unwanted radio isotypes that come about as byproducts. For example, if you're making lutetium 1 77 you can also get lutetium 177 M. The difference is not just a letter. The difference is a half-life of six days, that's preferable, versus a half-life of 160 days. Needless to say, doctors don't want radioactive substances kicking around your body for that long. 

And remember this is nuclear physics, making sure all of this happens in a safe way is critical. Those lead-lined hot cells? They require some pretty special treatment. At the Peter MacCallum Center, they've got what's called an unshielded cyclotron. Which meant a pretty serious basement reno. Mohammad explains just what was required.

Dr Mohammad Haskali: 6:40

A cyclotron sits in a room that has one meter thick concrete walls to shield all the neutron flux, because when a cyclotron is an operation it it generates lethal amounts of radiation okay, so that's the cyclotron vault. It's not a lot of space, but it's a lot of weight on the floor, right? So I'm probably talking over 60, 70 tons, just the cyclotrons and and then you've got all the hot cells each one of them is about 10 tons. And so if you have 10 hot cells, that's 100 tons spread over a few meters only so it's a lot of weight over a small footprint, which makes the engineering requirements quite demanding. And  a lot of other hospitals are have actually seriously considered investing in this opportunity and because of its unique requirements, it actually limits big pharma companies from being able to invest in them because you need a lot of these manufacturing processes in house or within reach of a hospital because of the half lives.

Rachel Williamson: 7:41

Just to be clear, the Peter MacCallum Center does not own its cyclotron. It's managed by third party. But keep this comment from Mohammad in mind because later in the series we'll find it's not just hospitals which believe they are the true home of radiopharmaceuticals. 

So now you have the cliff notes of how these drugs and diagnostics are made. Now we get to the nuclear physics. Mohammed, I'm keen to know what isotopes you make, and which ones are at the real bleeding edge of medical science.

Dr Mohammad Haskali: 8:17

So, uh, we utilise a range of radioisotopes at Peter Mac. We actually probably utilise every medically known radioisotope in our clinic involving fluorine 18, gallium 68, lutetium 177, iodine 121, iodine 124 and the list goes on really.

Rachel Williamson: 8:33

Do you use actinium or terbium yet? I know those are very advanced areas of research.

Dr Mohammad Haskali: 8:39

Absolutely. So we've currently just finished recruiting for the first terbium trial in Australia, as far as I know. And, uh, and in fact, we've treated, tens of patients using terbium PSMA, which targets the Prostate Specific Membrane Antigen which is used to treat prostate cancer patients with advanced disease. We also handle lead 212, which is considered an important radionuclide for targeted alpha therapy. And we've started to do a bit of work with actinium 225, but we haven't really done much work with that just yet.

Rachel Williamson: 9:11

I noticed that all of these are alpha emitters Mohammed. Could you explain the difference between alpha and beta emitters?

Dr Mohammad Haskali: 9:19

A radioactive atom has an unstable nucleus. It wants to be stable again. And it  becomes stable by emitting particles from the nucleus. So it can either emit a beta particle, which is a small, but higher energy particle, or an alpha particle, which is a massive particle with, a lot more destructive, energy associated with it. 

The best way to picture how they work is if you're trying to sink a ship, a beta particle is like shooting at that ship with bullets, but an alpha particle is like hitting it with a cannonball. 

A beta particle, you might require a lot of hits to get what we call double stranded DNA damage. Because when you get a one stranded DNA damage, The DNA is smart enough to fix itself back again. And for a beta particle, it requires a lot more of those hits before it can do that. But an alpha particle, a single hit, is probably more than enough.

They also travel different distances in the body. So a beta particle of a lutetium, for example, can travel up to one millimeter in tissue. Whereas an alpha particle has, very, very small, range, which means it's probably more effective at targeting micrometastases. But it's probably less effective at targeting, say, a big mass of tumour. So to me the best way of utilising beta and alpha is if you can combine them. I see them as complementary radionuclides.

Rachel Williamson: 10:48

Getting the isotope can be a geopolitical nightmare. Only 10 nuclear reactors in the world can make lutetium 1 77, a commonly used isotope for treating prostate and neuroendocrine cancers. And ytterbium 176? Right now, that comes almost exclusively from Russia. It means that just making a blockbuster drug or diagnostic might not be enough. Biotechs might also have to own the means of manufacturing as well. 

Mohammad, there are some very well-publicised shortages of these popular new isotopes overseas. Actinium 225 is in particular is getting a lot of attention. Shortages there are blamed for delaying the arm of Rayzebio's phase three trial earlier this year for neuroendocrine cancer. Did these shortages affect you at Peter MacCallum as well?

Dr Mohammad Haskali: 11:46

Sure, I mean, they create a logistical nightmare, but I think a lot of these things tend to get addressed with time as the clinical importance and significance and use of these things emerges and evolves. But of course, there's a limited supply of actinium 225 because the common way of getting actinium 225 is, uh, through the nuclear wastages, so if they run out, then we run out of actinium 225. Therefore alternatives are very, very tempting.

Rachel Williamson: 12:17

What kind of alternatives are there?

Dr Mohammad Haskali: 12:19

Well, lead 212 is an important one. So AdvanCell currently is a company in Australia that has been established to build generators for lead 212 production. And the beauty of that is that you, you can have an in house generator and produce lead 212 on demand for your clinical need. And its half life is 10 hours versus actinium, which is 10 days. Which makes it more suitable for the type of therapies that we're doing. So there are a lot of tempting things about lead 212, I think.

Rachel Williamson: 12:47

Could you give me a brief explainer as to why a half life of 10 hours, which seems like a very short window for you to work with it, is better than a half life of 10 days?

Dr Mohammad Haskali: 13:00

Yeah, so radionuclides, one of the major ways that we pick which radionuclide we're gonna label with is the biological half life of your drug. So if your biological half life of your drug If it remains in circulation for a few hours and then is rapidly excreted and metabolised then having a half life of 10 days isn't going to help you. In fact, what that might do is lead to off target toxicity because as your drug is metabolised and broken down and excreted through different organs, you have a long lived radionuclide that might retain in different organs for a longer period of time, that's not necessarily treating your cancer. Peptides, which are the typical agents utilised to administer radiopharmaceuticals that can be used for imaging and therapy, have a half life of a few hours. And so having a 10 hour, uh, half life of a radionuclide matches that very nicely. Which means you can maximise therapeutic potency, but reduce off target toxicity.

Rachel Williamson: 13:57

That was Dr. Mohammad Haskali from the Peter MacCallum Cancer Center in Melbourne, Australia. Now have you got all of that? Good, because now you know how the sausage is made, it's time to start following the money and find out who is in and who's trying to catch up.

Charis Palmer: 14:18

Hi there, I'm Charis Palmer, producer of Phase III. When Rachel and I set about building a new podcast for life science leaders, scientists, and long suffering biotech investors, we looked at what was missing in this space. We believe Phase III serves an unmet need for in-depth conversations in a world where nuance matters and AI-written investment articles simply won't cut it. If you agree, please follow us and sign up to our newsletter via LinkedIn, pledge financial support at phasethree.Buzzsprout.com and rate and review the podcast on the podcast platform you use, to help bring it to the attention of others. Now, back to the show.

Rachel Williamson: 14:56

Remember at the start of the show, when I said everyone wants a piece of this field? Let's just say big pharma is walking the talk when it comes to takeovers. I'm going to hit you with some very large numbers. 

Eli Lilly went first. It bought Point Biopharma in late 2023 for $US1.4 billion. Two months later, Bristol Myers Squibb bought Rayzebiofor $US4.1 billion. Then Novartis took over Mariana Oncology for $US1 billion. In June, AstraZeneca bought Fusion Pharmaceuticals for $US2.1 billion. And the week before this episode hit the airways, Eli Lilly went back for Radionetics Oncology, buying a right to buy it for $US1 billion. That's almost $US9 billion spent in just seven months. With an option over another billion. On five companies with no approved drugs or diagnostics. That's a lot to spend at a sector with a failure rate of 90%. 

So what's going on here? Enter Dr. Charlie Williams, the co-founder and managing director of specialist biotech investor, HB Biotechnology. He says these deals are a catch-up game as pharma companies rushed to buy drugs and isotope supply chains that they don't have time to DIY.

Charlie Williams: 16:27

It's really capability that's driving this land grab. So what you have to remember is that radiopharmaceuticals are not like traditional drugs that can be manufactured centrally and have some sort of reasonable shelf life. Radiopharmaceuticals are like ice melting in the sun. So to give you an example, gallium 68, the isotope used for Telix's prostate cancer diagnostic Illuccix has only a half life of 68 minutes, meaning the manufacturing process has to be finalised onsite in a hospital and supported by a network of gallium generators. Similarly, uh, Pluvicto the prostate cancer therapeutic from Novartis, which uses lutetium 177, it necessitates a time from order to infusion of only five days. So sure, a lot of these acquisitions, they're still being driven at the top line by good lead assets with good clinical data. However, I would argue that much of this round of acquisitions is actually a land grab for capability.

Rachel Williamson: 17:24

How are you seeing that translate in Australia? Because so far it looks like it's come in the form of just massive capital raises.

Charlie Williams: 17:34

I think Australia punches well above its weight when it comes to the number and quality of radiopharmaceutical companies. However, at least in this latest round of acquisitions, we haven't seen any in Australia yet. And one of the interesting things that we mentioned before is that a lot of the recent acquisitions has also been around alpha emitters. Uh, whereas the beta emitters, which is currently what our two leading companies, Telix and Clarity, they're predominantly developing beta emitters as their therapeutic candidates.

Rachel Williamson: 18:07

Just change the subject slightly, where does the radiopharmaceutical theme begin peter out? And I say this in the context of say, immunotherapy, where we might be seeing the limits of what can be done with the current tech, current concepts that we have. Where might those limits be for radiopharmaceuticals or do we just not know enough yet?

Charlie Williams: 18:31

Oh, if I knew, I'd, I'd, uh, I'd be a very good investor! But, look, I still think this has got a long way to go. You can even see the comments from someone like Novartis. There's been a big investment cycle in a class of drugs called ADCs, Antibody Drug Conjugates. Now, Novartis' head of oncology has actually come out and said we tried ADC, it wasn't really that successful, but we actually think the therapeutic index can be better in radiotherapeutics. Meaning, we can deliver more therapeutic efficacy killing cancer cells, without inducing as much toxicity as you can for say, ADCs. When you think about it, radiopharmaceuticals can really be thought of as akin to ADCs. You've got a, if you like, guided missiles. In this case it's not chemotherapy, it's a radioactive isotope. 

It's funny that radio pharmaceuticals used to be a little bit of a, it used to be a bit of an academic play thing. If you think nuclear medicine departments, they're in the basement of a hospital, um, some cardigan wearing folk, and I'm sorry, if there are any nuclear medicine people listening to the podcast. And there was, it wasn't thought to be really investable. Uh, that really changed, when Novartis in quick succession acquired Advanced Accelerators, AAA, in 2017. And quickly off the bat, they bought Endocyte to, you know, gain Pluvicto. Yet, they showed that if you run the right trials, you show the good results, and they were quite, quite frankly, they're stunning clinical results, that you can actually have a good marketable product, and develop a supply chain behind it for large pharma. 

And so I think part of what's driving this real craze is a catch up game. From a lot of large pharmaceutical companies that don't have exposure, but they've got large oncology franchises and they know they should have exposure to this. And it's much easier, especially when you, you're not used to these sorts of supply chains, to acquire the capability than to try and build it internally.

Rachel Williamson: 20:22

You mentioned Novartis just before. It's obviously the big wheeler dealer in this space. But the big excitement, as you've said, is really leading to those radiometals. So, what areas are you looking at from a chemistry perspective and from an isotope perspective that's piquing your interest as an investor?

Charlie Williams: 20:42

Yeah, sure. So look, while the chemistry is interesting, really the game is getting enough high energy radiation to a targeted site in a cancer cell for a significant period of time to kill cancer cells while sparing normal tissue. But really what you're looking at is having the right isotope half life, the right targeting, uh, moiety to get to the cancer cell, and, the right supply chain and logistics to get it around there. And everything else kind of doesn't matter. It has to, result in good clinical outcomes

Rachel Williamson: 21:15

You keep mentioning the right supply chain and this is an issue that we are focused on in this series, much to the disappointment of people who'd much rather talk about their science. But it does make me wonder what value you put on the isotope producers, CycloTek, CycloWest, Ionitix in the US, they've had some massive investment from the likes of Eli Lilly, I think it was. Because they're a producer. So what value do you put on those, even though you're a biotech investor? Are you sort of looking up that value chain as well?

Charlie Williams: 21:49

From a pure investment perspective, look, our fund really invests in therapeutics, and we're not really, you know, our mandate isn't to stray outside of that too far. Having said that, what's really interesting about a lot of these, um, current acquisitions is much of them come with, um, supply chain or manufacturing capability. You mentioned Lilly. I think that's a really good case in point. Their acquisition of Point Biopharma for 1. 4 billion. Their lead assets, is at best, it's a me-too Pluvicto, but I think its results have been kind of underwhelming. It might gain a little bit of market share. But what came with, uh, that acquisition of Point was a very large, uh, manufacturing capability. I think it was 180,000 square foot, manufacturing campus in Idaho plus an R& D center up in Canada. And I think you could argue that Lilly essentially paid 1.4 billion for a warehouse.

Rachel Williamson: 22:41

That's really interesting. What are your thoughts on Australian companies, and how they're playing in that space and how, also how they compare globally?

Charlie Williams: 22:50

I mentioned the two up front, Clarity and Telix, and they're probably the largest market cap, in Australia and the most advanced. Interesting that they've, um, they've kind of been built from two different premises and approaches. Telix was actually formed from the licensing of three different assets and it's continued to build in that way of continually bringing in capability, manufacturing, isotopes, different targeting moieties. And you can tell that they're continually investing in that. capability, and I think that's super important it's not just about the clinical results and the science, although incredibly important, it's all about supply chain and capability. You can see with Illuccix for Telix is, uh, they did a deal very early on to make sure that they had a network of gallium generators that they could actually supply their customers. 

Clarity, um, it was kind of built from the other way around, around a piece of IP of this, this SAR technology. Copper had a problem of leaking out, and not, that's not so great, uh, when you've got a radiotherapeutic, which is designed to kill cells when it's leaking out of your body. And you know, some of their IP is to stabilise that within their chelator. Well, one of the issues, and I think one of the biggest problems from an investor and one of my, biggest question marks when looking at it, was you can't produce copper 67 anywhere. That didn't exist. Now, as they've developed their science, um, they've done deals with Northstar Isotopes to deliver and generate copper 67. And that's an incredibly important part of Clarity's story. And, if you're a third party acquirer, you're a large farmer, I would hazard a guess that you'd be looking at both of those companies together to really vertically integrate your supply chain, in this area.

Rachel Williamson: 24:37

That was HB Biotechnology co-founder and managing director Charlie Williams. There's a lot about radiopharmaceuticals that isn't like normal biotech. From the just-in-time nature of making enter, delivering treatments and diagnostic aids that have minutes or hours long half lives. To making sure you have enough of the nuclear part so the drug or diagnostic can even be commercialised. But these are teething issues for an industry that has exploded in a very short time. In our next episode we'll find out what two companies at opposite ends of the development pipeline are doing about securing those supplies.